Liberty and Ownership

In the United States, we often equate having “made it” by: owning a house, car, etc. To me, having “made it” means being able to do what I want. This concept doesn't always mesh neatly with owning things though. If we're to define liberty, as I have in the past, as both freedom from coercion and the ability to carry out your will, we can see that holding property can both increase freedom and decrease it.

For instance, if I own a house this means I don't have the freedom to move as much as someone in an apartment, and even less than someone who is on a month-to-month lease or with a right-to-sublet. However, on the other hand, the latter doesn't have the freedom from the landlord's coercion, privacy issues, inflation, etc.

I'm finding more and more that owning things can be a liability. What are the hits to freedom that come from ownership? One of the first I see are switching costs that prevent a whole host of activities without a significant lost of sunk costs. If you buy a house, it would be great if the market and selling procedure was like buying a pack of gum – or heck even a car. Instead, this isn't possible – there's too much friction to be able to move easily – not to mention furniture and other moving issues.

Another problem with ownership is maintenance issues. For cars on lease, the maintenance is partially the responsibility of the company that sold it to you – not so if you own it. This is where insurance comes in. It's economically like renting a body shop, mechanic, etc.

The issue with everyone thinking that owning things is great is that everyone financing every large purchase now from the usually house and car down to TVs and computers. The result: increased prices of the assets themselves. There's a reason the median cost of a new car is about $28k – it's the financing. The problem with this is that there aren't any “starter homes” like there once were. You might as well build them big if lenders will give anyone a loan for $250k - the same goes for cars.

In the US, we even subsidize home ownership with the ability to write off the interest and receive various tax credits – like it's utopia if everyone owned their living space. In fact, I'm leaning toward the economic switching cost utility of renting as a much more efficient way of doing it.

In the end, I just want a level playing field with no subsidies for buyers or renters and let the chips fall where they may. For me, I can see the benefits of renting much clearer now.

What do you guys think?

Comments

[James]

You know where I stand here - I'm a strong proponent of renting anything with a well-established rental market. Some things (like, say, used cars) don't have a well developed enough rental market to bring rental costs down close to the cost of ownership.

I won't go as far as to say that renting a house is actually cheaper than buying - but it isn't far off. In my way of thinking, the difference in cost is buying you landlord services, flexibility in living arrangements, and the opportunity to invest any potential down payment (or difference in rent vs mortgage/maintenance) in a better asset.

[Fr. Frank Brown]

Buying a house has not decreased your liberty. You have voluntarily entered into that agreement at a great cost and hopefully great consideration by you. If it does not fit with your current life style, you are free to sell at any point. You could always "price it to sell fast" if your liberty is such a priority.

Of course owning things is a liability. I am happy to note that we do agree on something. However, your liberty allows you to rid yourself of this liability at any time.

[Fr. Frank Brown]

I think a better description of what you are looking for is freedom from responsibility. That is not the same as liberty.

[Nick Pinkston]

Frank, I think we have our definitions off.

If you look at the link to the other article: (http://njp12.typepad.com/nickpinkston/2009/07/liberty-theory-vs-reality.html) you'll see how I define liberty & freedom, and their differences. Using those definitions, you're right that my 'freedom' hasn't been reduced by buying a house - the laws haven't changed. The freedom to sell the house at any time is theoretically true, however in this illiquid market, I'm not realistically going to be able do so without taking a massive hit.

Hence, my liberty (as defined) has been decreased in certain areas - such as the ability to actually sell the house. In that article, I explain the difference between theoretical and real liberty.

Part of this definitely is freedom from responsibly, however responsibly comes with obligations. Those obligations reduce your abilities to carry out your will in some ways, and hence are restrictions on your liberty.

[Fr. Frank Brown]

"First, we have to define liberty, and I can think of no better way than this: the absence of coercion."

Where is the coercion in this example? You freely bought a house knowing that you are taking on some responsibility in caring for it or having it cared for. I do not think the house is capable of coercing you. The housing market can not coerce. Is it coming from you because you no longer want the responsibility?

Liberty trumped by money! "I'm not realistically going to be able do so without taking a massive hit." So, the amount of liberty lost here is not worth that much anyway, certainly not worth $$$.

[Nick Pinkston]

Yea, that quote is a little out of context / poorly worded on my part.

The spirit of that article is that there's freedom and liberty & they aren't the same. Freedom is having little coercion; whereas liberty is freedom + capabilities & options - as I define them at least.

The range of ability is what the house is restricting. The house could put me in a situation where I'm stuck because of current market illiquidity. This limits my range of options (such as moving away to get a new job, etc.) more than if I rented.

I think you understand that economic costs figure into every decision we make, and I think you're right to point out that it could be that "the amount of liberty lost here is not worth that much anyway, certainly not worth $$$."

However, I think you can easily see that if I was on a month-to-month lease (instead of owning) it would give me more ability to move to take the job. Since I define liberty as freedom and ability this is in complete congruence. Do you disagree?

[FrBrown]

So, liberty is freedom and lack of responsibility or obligation so you can do what you want, when you want.

"The house could put me in a situation ... " No, you put yourself in the situation. The house can not DO anything. The blame lies solely with you. If you have changed your mind about owning a house, which you seem to have done, then sell it. Admit it was a bad decision for you and your lifestyle and move on. It can not take away your liberty. In your terms, your economic costs have changed, the opportunities have not been taken away. Liberty is not free. If you think your liberty has been reduced, you have given it away freely.

[Nick Pinkston]

I think you're missing my point.

Let's go step by step, answer back on this:

Do you see the distinction that I'm making between freedom & liberty in that freedom represents the absence of coercion and that liberty represents that plus your ABILITIES (aka choices, capabilities, ad inf.).

You're treating liberty as if there is a fixed amount for us all with only the law to determine its level. I would disagree with this notion.

So, do you see the distinction? If so, are you just saying you disagree with this notion or that you don't see how it can be applied like I'm applying it?
If not, then there's nothing else I can tell you that will show you - all of my friends got it from that...

[FrBrown]

I understand your freedom and liberty definitions. However, the rest of your argument does not make sense. You have chosen a path that gives you some responsibility and obligation. So, you have limited you "liberty," as you define it, by making such a choice. The house does not do that to you.

Are your choices free from responsibility and obligation?

But, I guess if all of your friends got it than you must be right!

[FrBrown]

As far as what your friend, James, says above, I have no problem with it. He likes to rent instead of buy. It fits his lifestyle and economics. He isn't whining about his choices taking something away from him. You may agree with him economically, but I think his argument is actually stronger because he doesn't try to make it into something that it is not.